2. MATERIAL ACCOUNTING POLICIES
2.1 Basis of preparation
The standalone financial statements have been prepared
in accordance with the Indian Accounting Standards
(hereinafter referred to as the Ind AS) as notified by
Ministry of Corporate Affairs pursuant to Section 133 of the
Companies Act, 2013 read with Rule 3 of the Companies
(Indian Accounting Standards) rules, 2015 and Companies
(Indian Accounting Standards) Amendment Rules, 2016
and presentation requirement of Division II of Schedule III
to the Companies Act ,2013 (Ind AS Compliant Schedule
III) ,as applicable to the standalone financial statement .
Upto the year ended 31 March, 2016, the Company
prepared its standalone financial statements in
accordance with accounting standards notified under the
section 133 of the Companies Act, 2013, read together
with paragraph 7 of the Companies (Accounts) Rules,
2014 (hereinafter referred to as 'Previous GAAP'). The date
of transition to Ind AS is 1 April, 2015.
The standalone financial statements are presented in
Indian Rupee and all values are rounded to the nearest
lakhs, except when otherwise stated.
2.2 Basis of measurement and presentation
The standalone financial statements have been prepared
on the historical cost basis unless otherwise indicated.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1,2, or 3 based
on the degree to which the inputs to the fair value
measurements are observable and the significance of the
inputs to the fair value measurement in its entirety, which
are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that
the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset
or liability
Summary of material accounting policies are set out below.
2.3 Revenue recognition
Revenue is recognised to the extent that it is probable
that the Company will collect the consideration to which
it will be entitled in exchange of goods or services that
will be transferred to the customers taking into account
contractually defined terms of payments. Revenue
excludes taxes and duties collected on behalf of the
Government and is net of customer returns, rebates,
discounts and other similar allowances.
i. Revenue from real estate projects - The Company
derives revenue, primarily from sale of properties
comprising of both commercial and residential
units. Revenue from sale of constructed properties
is recognised at a 'Point of Time', when the Company
satisfies the performance obligations, which generally
coincides with completion/possession and offer
for possession of the unit/NOC received for fitout
offer. To estimate the transaction price in a contract,
the Company adjusts the contracted amount of
consideration to the time value of money if the
contract includes a significant financing component.
ii. In case of joint development projects, wherein land
owner provides land and the Company acts as a
developer and in lieu of land, the Company has
agreed to transfer certain percentage of the revenue
proceeds, the revenue is accounted on gross basis.
In case, where, in lieu of the land, the Company has
agreed to transfer certain percentage of constructed
area, revenue is recognised in respect of Company's
share of constructed area to the extent of Company's
percentage share of the underlying real estate
development project.
iii. Revenue from sale of land without any significant
development is recognised when the sale agreement
is executed resulting in transfer of all significant risk
and rewards of ownership and possession is handed
over to the buyer. Revenue is recognised, when
transfer of legal title to the buyer is not a condition
precedent for transfer of significant risks and rewards
of ownership to the buyer.
iv. Revenue from sale of development rights is
recognised when agreements are executed.
v. Income from construction contracts is recognised by
reference to the stage of completion of the contract
activity at the reporting date of the standalone
financial statements. The related costs there against
are charged to the Standalone Statement of Profit
and Loss. The stage of completion of the contract
is measured by reference to the proportion that
contract cost incurred for work performed up to
the reporting date bears to the estimated total
contract cost for each contract. When the outcome
of a construction contract cannot be estimated
reliably, contract revenue is recognised to the extent
of contract costs incurred that it is probable will be
recoverable. When it is probable that total contract
costs will exceed total contract revenue, the expected
loss is recognised as an expense immediately.
vi The revenue on account of interest on delayed
payment / transfer charges / forfeiture income
and other associated charges by customers and
expenditure on account of compensation / penalty
for project delays are accounted for at the time of
acceptance / settlement with the customers due
to uncertainties with regard to determination of
amount receivable / payable.
vii Income from licence fee is recognised on accrual
basis in accordance with the terms of agreement
with the sub-licensees.
viii Income from rent is recognised on accrual basis in
accordance with the terms of agreement with the
lessee.
ix. Income from maintenance charges is recognised on
accrual basis.
x. Interest income on bank deposits is recognised on
accrual basis on a time proportion basis. Interest
income on other financial instruments is recognised
using the effective interest rate method.
2.4 Leasing
Ind AS 116
The company has applied Ind AS 116 for recognition of
revenue from leasing.
As a lessee
The company recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises
the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate
of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same
basis as those of property and equipment and intangible
assets. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for
certain re-measurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, company's incremental borrowing rate.
Generally, the company uses its incremental borrowing
rate as the discount rate.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is
a change in future lease payments arising from a change
in an index or rate, if there is a change in the company's
estimate of the amount expected to be payable under
a residual value guarantee, or if company changes
its assessment of whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit
or loss if the carrying amount of the right-of-use asset has
been reduced to zero.
Short-term leases and leases of low-value assets
The company has elected not to recognise right-of-use
assets and lease liabilities for short term leases that
have a lease term of 12 months and low-value asset. The
company recognises the lease payments associated with
these leases as an expense on a straight-line basis over
the lease term.
As lessor
Receipts from operating leases are recognised in the
Standalone Statement of Profit and Loss on a straight-line
basis over the term of the relevant lease. Where the lease
payments are structured to increase in line with expected
general inflation to compensate for expected inflationary
cost increases, lease income is recognised as per the
contractual terms.
2.5 Borrowing costs
Borrowing costs directly attributable to the acquisition
or construction of qualifying assets are capitalised/
inventorised until the time all substantial activities
necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready
for its intended use or sale.
All other borrowing costs are recognised in profit or loss
in the period in which they are incurred.
2.6 Employee benefits
a. Defined contribution plan
The Company's contribution to provident fund and
employee state insurance scheme are considered
as defined contribution plans and are charged as
an expense based on the amount of contribution
required to be made and when services are rendered
by the employees.
b. Defined benefit plan
For defined benefit plan in the form of gratuity,
the cost of providing benefits is determined using
the projected unit credit method, with actuarial
valuations being carried out at the end of each annual
reporting period. Remeasurement, comprising
actuarial gains and losses, is reflected immediately in
the balance sheet with a charge or credit recognised
in other comprehensive income in the period in
which they occur. Remeasurement recognised in
other comprehensive income is not reclassified to
profit or loss in subsequent periods. Past service cost
is recognised in profit or loss in the period of a plan
amendment. Net interest is calculated by applying
the discount rate at the beginning of the period to
the net defined benefit liability or asset. Defined
benefit costs are categorised as follows:
• service cost comprising current service
costs, past service costs, gains and losses on
curtailments and settlements;
• net interest expense or income; and
• remeasurement
c. Short-term and other long-term employee benefits
Liabilities recognised in respect of short-term
employee benefits in respect of wages and salaries,
performance incentives, leaves etc. are measured at
the undiscounted amount of the benefits expected
to be paid in exchange for the related service.
Accumulated leaves expected to be carried forward
beyond twelve months, are treated as long-term
employee benefits. Liability for such long term
benefit is provided based on the actuarial valuation
using the projected unit credit method at year-end.
2.7 Taxation
Income tax expense for the year comprises of current tax
and deferred tax.
Current tax
Current tax is the expected tax payable on the taxable
income for the year calculated in accordance with the
Income Tax Act and any adjustment to taxes in respect of
previous years.
Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the standalone financial statements and the
corresponding amounts used in the computation of
taxable income. Deferred tax liabilities are recognised
for all taxable temporary differences. Deferred tax assets
are generally recognised for all deductible temporary
differences, the carry forward of unused tax losses and
unused tax credits. Deferred tax assets are recognised
to the extent that it is probable that taxable profits will
be available against which those deductible temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to
be recovered.
Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in
equity respectively.
Minimum Alternate Tax (MAT)
Minimum Alternate Tax (MAT) is payable when the taxable
profit is lower than the book profit. Taxes paid under
MAT are available as a set off against regular income tax
payable in subsequent years. MAT paid in a year is charged
to the standalone Statement of Profit and Loss as current
tax. The Company recognises MAT credit available as an
asset only to the extent that there is convincing evidence
that the Company will pay normal income tax during the
specified period i.e the period for which MAT credit is
allowed to be carried forward. MAT credit is recognised
as an asset and is shown as 'MAT Credit Entitlement'
The Company reviews the 'MAT Credit Entitlement' asset
at each reporting date and write down the asset to the
extent the Company does not have convincing evidence
that it will pay normal tax during the specified period.
2.8 Property, plant and equipment
Property, plant and equipment is stated at their cost
of acquisition/construction, net of accumulated
depreciation and accumulated impairment losses, if any.
The cost comprises purchase price, directly attributable
costs for making the asset ready for its intended use,
borrowing costs attributable to construction of qualifying
asset, upto the date the asset is ready for its intended use.
Subsequent expenditure related to an item of property,
plant and equipment is included in the carrying amount
only if it increases the future benefits from the existing
asset beyond its previously assessed standards of
performance.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected from the use. Any gain or loss arising on re¬
recognition to the asset is included in the standalone
Statement of Profit and Loss.
Property, plant and equipment which are not ready for
intended use as on the date of Balance Sheet are disclosed
as 'Capital work-in-progress'
2.9 Investment properties
Investment properties are properties held to earn rentals
and/or for capital appreciation. Investment properties
are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties
are stated at cost less accumulated depreciation and
accumulated impairment loss, if any. The cost includes
purchase/construction cost, directly attributable cost and
borrowing costs, if the recognition criteria are met. The
fair value of investment property is disclosed in the notes.
An investment property is derecognised upon disposal or
when the investment property is permanently withdrawn
from use and no future economic benefits are expected
from the disposal.
Any gain or loss arising on derecognition of the property
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is
included in profit or loss in the period in which the
property is derecognised.
2.10 Depreciation on property, plant and equipment and
investment property
Depreciation on property, plant and equipment and
investment property is provided on straight line basis
as per the useful life prescribed in Schedule II to the
Companies Act, 2013, except in respect of Shuttering
and Scaffolding, in which case the life of the asset has
been assessed on technical advice, taking into account
the nature of asset, the estimated usage of the asset,
the operating conditions of the asset, past history of
replacement, anticipated technology changes and
maintenance support etc. Accordingly the useful life of
the assets taken is as under:
2.11 Intangible assets and Intangible asset under
development
Intangible assets comprises buildings constructed on
'Build-operate-Transfer' (BOT) basis. The company has
unconditional right to use/lease such assets during
the specified period. After expiry of specified period,
these assets will get transferred to licensor without any
consideration. Since, the Company has no ownership
rights over these assets and has limited right of use
during the specified period, these assets are classified
as intangible assets. These intangible assets are initially
recognised at their cost of construction. The cost
comprises purchase price, directly attributable costs for
making the asset ready for its intended use, borrowing
costs attributable to construction of qualifying asset,
upto the date the asset is ready for its intended use.
Subsequent to initial recognition, intangible assets
are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Intangible assets which are not ready for intended use as
on the date of Balance Sheet are disclosed as 'Intangible
assets under development'
Intangible assets are amortised on a straight line basis
over the licence period (right to use) which ranges from
20 to 44 years.
2.12 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible
assets to determine whether there is any indication
that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent
of the impairment loss (if any). When it is not possible
to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable amount
of the cash generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units
for which a reasonable and consistent allocation basis can
be identified.
Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs
of disposal and value in use. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately
in profit or loss.
2.13 Investment in equity instrument of subsidiaries
(including partnership firm) and associates
Investment in equity instrument of subsidiaries and
associates are stated at cost as per Ind AS 27 'Separate
Financial Statements'. Where the carrying amount of an
investment is greater than its estimated recoverable
amount, it is assessed for recoverability and in case
of permanent diminution provision for impairment is
recorded in Standalone statement of Profit and Loss. On
disposal of investment, the difference between the net
disposal proceeds and carrying amount is charged or
credited to the standalone statement of Profit and Loss.
2.14 Inventories
Inventory comprises completed property for sale and
property under construction (work-in-progress),
Land cost, construction cost, direct expenditure relating
to construction activity and borrowing cost during
construction period is inventorised to the extent the
expenditure is directly attributable to bring the asset to
its working condition for its intended use. Costs incurred/
items purchased specifically for projects are taken as
consumed as and when incurred/received.
i. Completed unsold inventory is valued at lower of
cost and net relisable value. Cost of inventories are
determined by including cost of land (including
development rights), internal development cost,
external development charges, materials, services,
related overheads and apportioned borrowing costs.
ii. Work in progress is valued at lower of cost and net
relisable value. Work-in-progress represents costs
incurred in respect of unsold area of the real estate
projects or costs incurred on projects where the
revenue is yet to be recognised. Cost comprises cost
of land (including development charges), internal
development cost, external development charges,
materials, services, overhead related to projects under
construction and apportioned borrowing costs.
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